Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
My questions are in bold italics and her responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
51 and 47. Married for 17 years, together for 24.
Do you have kids/family (if so, how old are they)?
Two (from first marriage) – boy and girl, ages 33 and 31.
What area of the country do you live in (and urban or rural)?
Suburban Northeast
What is your current net worth?
$2.2M
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
- Retirement Accounts – $1.4M (401Ks, IRAs, etc in various mutual funds)
- Real Estate – $705K net (6 homes and 2 land properties worth $1.15M, less $445K in mortgages = primary home, second home, and rentals)
- Liquid Taxable Accounts – $65K (savings & quality individual stocks I dollar-cost-average buy over the long term).
- Metals – $30K (hard assets, not metal funds)
- Debt – mortgages (see above), floating credit card balances (can go up to $10K with a major project, then paid off in a few months – currently $8K)
Not considered in net worth, but of note:
- Emergency Fund – we have access to $200K in a HELOC that we use for our emergency fund – it’s available immediately if we need it, but we don’t have a lot of cash tied up not earning interest. And it doesn’t cost us anything if we don’t use it…
- Classic car (Shelby Cobra) – $45K (my dream car and a goal I set for myself when I was 16 – if anything disastrous happened, we still could sell it)
What is your job (type of work and level)?
I am a global project manager for a large multinational corporation. My husband is an insurance adjuster.
What is your annual income?
$250,000, plus a minimum annual bonus of $50K+ (not guaranteed, but have not missed one in 15 years)
How did you grow your income so high?
Developing a good reputation for being reliable and working hard – whatever I was tasked with, I completed successfully, on time, and in budget.
Being willing to take on responsibility and perform a job first, before getting the formal position, promotion, etc.
Talking to my managers about what I what I want to do – 4 job moves/promotions at the company (including a 3 year transfer to Europe) were decided by my management, looking to use my skills in different areas. But also watching out for my personal goals – being willing to leave a company when it was apparent that I had hit the ceiling.
Good leadership, and taking some calculated risks.
What is your main source of income (be as specific as possible — job, investments, inheritance, etc.)?
Our salaries. The current rental income we receive goes directly to mortgage and expenses on the rental properties.
What is your annual spending and what are the main expenses you have?
Roughly $7500 a month (excluding the rental properties, which are a net zero cash flow).
Mainly mortgage, real estate taxes, utilities, insurance, food, gas, and up to $2000 a month on home renovation materials when we are in a real estate/renovation project.
Home and auto maintenance is minimal – we own our cars outright and drive them for 10+ years, and my husband does nearly all the repairs himself, so it’s only material costs.
Entertainment & gifts varies widely – we spend for family celebrations (holidays, big event parties, weddings, etc) and travel, but otherwise it’s minimal (occasional movie or show tickets).
We work very hard, so it’s important to us that we don’t feel restricted when we are on vacation (although we are not lavish spenders anyway).
And family is SO important to us, we are generous with gifts – we really enjoy it, and want to balance doing what makes us happy today with saving for the future.
How did you accumulate your net worth?
EARN: Worked really, really hard for 30 years to increase my salary as described above. Also started in the workforce early (age 18), while going to school part time for free on the company’s tuition reimbursement program.
SAVE: Started early (age 18) and saved consistently – we never touched the accounts once we added to them. Each raise would increase the 401K contribution rate (and some IRA contributions during the good years). We didn’t increase our living style as my salary went up, and we never counted on the bonus – when it came, we’d splurge with a gift for ourselves, then save or invest the rest (usually in one of the properties). We also saved a ton of money over the years by doing 95% of home improvements ourselves (my husband can do anything when it comes to house projects, and I’m pretty handy myself).
INVEST: Investing in funds/stocks for long-term – no quick trades or the latest hot stock. We also bought our first rental property 15 years ago – and continue to use equity money or my bonuses to buy/improve additional properties. We now have 4 units, and renovating a 5th – that is where we will stop, since we manage the properties ourselves.
What money mistakes have you made along the way that others can learn from (or something you’d do differently)?
Not regularly monitoring and rebalancing my portfolio.
I lost some potential gains by “coming too late to the game”.
Also getting too emotionally involved in investment real estate – some great opportunities we missed out on, and some we bought that were not quite so profitable.
And letting ourselves get into credit card debt – we convinced ourselves it was “good debt” since it was to buy materials for investing in our properties, but we should have managed it better. Now the excess salary pays it off, but we’re still trying to improve that mindset.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
The power of compound interest is truly amazing – it took me 8 years to save my first $100K in my 401K, now I earn that in 3 months. I have learned over the years that low cost index mutual funds are the way to go if investing is not your hobby – all our contributions now go to index funds.
And now I just learned on ESI about the “Backdoor Roth” conversion, that does not have an income limit! I will certainly start utilizing that, since we’ve reached the contribution limits some years ago.
What are you currently doing to maintain/grow your net worth?
Maximizing all our retirement contributions, additional after-tax savings, and continue investing in our rental properties.
Do you have a target net worth you are trying to attain?
We originally estimated we would need $1.5-3.0M to retire – we set up our mortgage and investing plans with a target age of 52 for me to retire.
We have achieved the minimum, but I now plan to stay with the company until 55 (minimum retirement age to get health insurance with them) – and with our current trajectory, we should easily reach $3M in the next 4 years.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
I will retire at 55, but my husband plans to work until he’s 60.
Two of the rental properties will be paid off at my retirement, so that will help replace the income.
We already bought (cash) a lakefront property with a small cabin that we plan to build our (downsized) retirement home. However, it’s in Vermont, which is not tax-friendly (and cold!), so we are still considering a move to another state that has greatly reduced property taxes and insurance.
We also are renovating a smaller home in our current neighborhood that we will use as a rental for now, but potentially downsize to that if we want to stay in the area to be closer to our families.
We did so much travel during my 3 year job transfer to Europe, that neither of us is interested in more travel after retirement.
We don’t plan to change our lifestyle much, but expenses will significantly decrease without travel and with lower property ownership expenses (mortgages, taxes, insurance, utilities – and without home improvement projects!).
Is there any advice you have for ESI Money readers regarding wealth accumulation?
Start early and stick with it!
Save whatever you can, even if it’s a small amount.
Take some risks, but do your research first – be too safe with your investments and your job, and you will fall behind as the world keeps moving forward.
Find what works for you – real estate is great for us, but it’s certainly not for everyone. You can do just fine with steadily increasing saving in low cost funds.
And watch that debt! It can hurt you in the long run.
Another great interview with an impressive person! I really like this quore – “Developing a good reputation for being reliable and working hard – whatever I was tasked with, I completed successfully, on time, and in budget.”
That’s a powerful way of continuing to increase your salary.
Really really enjoy these millionaire interviews! It’s always insightful to see how people have crossed that $1M threshhold.
The more I read the more I realize that slow and steady is how most of these millionaires did it. Career development was important as well. It seems every one of these interviews talks about how their career progressed because they were intentional about making sure they were delivering value to their employers.
“Start early and stick with it!” – excellent advice. Consistency is soooo important
Motivating post. Funny how Earning and Saving can make such a big difference. I am impressed by their property portfolio. I have been interested in real estate but the hassle versus the benefit concerns me. For now I will stick with index funds and a lot of Earning and Investing.
REIT funds are easier than owning physical real estate. We have two rent house, but even with a property manager, tenants skip out, pay late, don’t care of the houses. All it takes is a bad tenant and your ROI drops a ton.
Real estate is certainly not for everyone. We dipped our toes in with one property for a few years to see how we would like it. We have had a few bad experiences, but we are very good landlords (one tenant asked to move into our current renovation project when it’s finished, because they’re outgrowing their apartment but don’t want to lose us as landlords!), so we have found if we treat our tenants well, they treat our properties well.
I don’t think that REIT funds (or any funds for that matter) have the potential income for the amount of capital invested, but you have to really think about your temperament for landlording. It’s not for the faint of heart – maybe a bit easier with a property manager, but still has risks that you need to be willing to deal with.
I like reading your blog, and the millionaire interviews. I would like to suggest that you have more millionaires who had lower lifetime incomes. My wife and I were married (each for the first time) in 2009 when I was 54 and she was 47. Neither one of us have ever made a six figure base salary (and my biggest bonus was at best 20% of base salary. My point is that people should to be encouraged to believe that becoming a millionaire is possible on a modest salary. What has helped us is watching our expenses, starting saving early, saving a significant % of one’s salary and discipline. In fairness, the fact that we did not have children, and lived through a good time in the stock market also helped our accumulation. Also, tracking one’s net worth is a good way to feel progress. I also would like to suggest the prodigious saver formula as a way of also keeping track of how one is doing. The formula is one’s age divided by 10 then multiplied by one’s annual income. The result is a target net worth for an individual. For example a 50 year old with an annual income of 100K should have a target net worth of 500K. The formula loses its validity the younger a person is, but seems to work well maybe after age 30 or so. Just my thoughts. Thanks for a good blog.
So are you a millionaire? If so, would you be willing to be interviewed?
I don’t really pre-qualify people and don’t want to. That would seem inauthentic to me. I simply find people who have net worths over $1 million, then I share their stories to try and learn what made them successful. I don’t try to manage those responses — I just get them as they are.
The fact is that it’s much easier to become a millionaire if you make a high income. It’s simple math.
Of course you can become a millionaire without a large income, but it’s much harder. It’s just like becoming a millionaire while saving 5% of your income — it can be done, but it’s much harder than if you save 20%+.
“People should to be encouraged to believe that becoming a millionaire is possible on a modest salary” is a noble sentiment but just because it’s a feel-good thought doesn’t mean it’s correct or should be the focus of this series.
My take is a bit different. I think people should work to grow their incomes. That’s why I write so many career-focused posts. There are things people can do to earn more and if they do they have a better chance of becoming wealthy.
That said, I have written posts on becoming wealthy while earning a lower income. I like those because they are quite compelling. But they are also fairly rare. That’s why my preferred method is that people increase their incomes.
I couldn’t agree more. Its true that people can become a Millionaire on a low or modest income, but lets be clear if that’s a goal focus on earning. Years ago a friend was complaining about how expensive everything was and he couldn’t save enough. I said its really simple you need to make 30% more than you make today so go make it happen.
Not just because I said to do it, but that is exactly what he did. Its not luck that people land high paying roles, although some may have had a lot of luck, its being focused and goal oriented.
I’m inclined to agree. As I sit here in my early sixties, my success was based on a consistent accumulation, and not extraordinary income. I started saving while making $3.40 an hour (when I was 22), and didn’t get my engineering degree until I was 34. Over my life, I spent too much on stupid things (money that could have gotten me to my targets far earlier), but there was no internet mentorship (no internet at all) and I had no role models or mentors. I work for the government where my income is capped (a personal choice to serve), so the “E” part of ESI wasn’t adjustable. “Time” is also a component of ESI, and I believe the average Joe/Jane can set and reach pragmatic targets in the millions with deliberate and dedicated effort. The reason I like the ESI blog is that it documents many lifestyle choices where the different elements of E, S, and I are used to reach goals.
I agree with Brad Butts point that interviewing folks who had lower lifetime incomes is very important to the majority of folks. Easier to relate personally.
Having successfully accomplished the goal while always on an low to mid average salary the important aspect was always discipline, priorities, long term goals.
While doing this we also paid for our children’s undergraduate college, etc. , etc.
And yes, the first million is the hardest. Definitely gets easier after that.
Maybe I should clarify. I did not make a six figure income until 2010. Earning is much like compound interest – slow growing at first, but picking up speed as time and effort goes on. As I mentioned in the interview, my income greatly increased because of the reputation I built at my company, and taking calculated risks. I was actually a high school dropout when I began my “career”. I sincerely hope everyone believes they can achieve becoming a millionaire – you just need a plan,, the willingness to work for it, and the discipline to stick with it.
That is amazing! Hard work is the great equalizer when you don’t have the opportunities of others.
Just wanted to say that I am also really enjoying these Millionaire Interviews. It is interesting to compare and contrast the different paths folks have taken to building wealth, and to pick out the common themes. You could collect these in a book at some point. Thank you, ESI!
I like the idea if these can be collected and made into a book. Millionaire next door really needs an update. This could be it.
Good down to earth interview that includes some good lessons. Working hard and having that extra motivation to “hustle” can really make a difference. Sounds like they could do fine with just their jobs, but the fact that they have branched out into real estate and do most of the work themselves is impressive. Just goes to show you that anyone willing to put in some extra effort can be successful and do well for themselves. There is no shortage of opportunities in America. Starting early and consistent automatic long term investing is another good example that has worked well for me. The increase in my portfolio over the last 2 years has been amazing even though I have never made a large salary.
We could do just fine with our jobs now, but 22 years ago when we started our “millionaire plan”, I was only making $44K a year, and did not even consider that I would ever be making that kind of money. That’s why we started flipping houses and buying rentals – we knew that rental income would be a key contributor to retiring early. The recent increases in salary has just allowed us to reach $2.2M currently, instead of our original projection of $1.5M.
And you’re right – that small consistent savings plan I started 33 years ago is amazing to watch grow now…
Great interview. Thanks for sharing the secrets of your success. I bet the cobra is a beautiful car. You mentioned metals as part of your assets. Are you referring to gold or silver coins?
Yes – gold coins and silver bars currently (we are researching palladium). It’s a “defensive” asset, but important to us to be diversified, and my husband prefers the actual metals to just a metal fund. Not that we don’t have confidence in the markets, but hey, you never know….
And yes, the car is BEAUTIFUL!!! 🙂
Thanks for the clarification on the metals.
Enjoy it!
Just a point of clarification:
Is the 250k + 50k bonus for just one person? Or is that combined (which is seems). If that’s the case, I’d be curious to know how that breaks out per person.
Great motivating post though! Those are some great numbers! Well-placed investments and hard work.
Salary is combined. I make 200k + 50k bonus, and my husband’s insurance inspection business is more variable, so we budget based on the minimum of 50k (extra is invested). His other contribution to our income is the “avoidance costs” of almost never needing to hire out for anything. Home renovation projects, car and house repairs & maintenance, you name it, he can do it. We saved 70k in one year alone just on a house flip that we did ourselves vs. contracting it out.
I really enjoy these posts. They serve as confirmation, and also motivation to continue moving forward to greater heights.
Congratulations on achieving your number.
I’m especially impressed with the $100k return every 3 months on $1.4m in 401k funds. If you don’t mind me asking, which funds have you found with this type of return?
Too much detail to spell out here, but it’s mostly in my 401K (1M), so I’m limited to the funds available. The rest is in Rollover IRAs and smaller stocks and funds (14 total), which we set up more aggressively. My 401K is mostly Vanguard funds, diversified (35% large cap – growth & value, 25% mid-cap – growth & value, 20% international – including 5% emerging markets, 10% blended Target 2030 fund, and 10% hi yield corporate bonds). The portfolio is up 15% YTD, and the best performer is Vanguard Primecap Admiral fund (VPMAX) – up 30% in 1 year, and 18% per year over the past 5 years – this is the biggest chunk of my portfolio. Other good ones have been T. Rowe Price Institutional Mid-Cap Growth (PMEGX), and Vanguard Selected Value (VASVX). The internationals have also been outstanding this past year… So we’ve been earning 60-70K-ish per quarter on the 401K (1M), and 25-30K on the rest of the portfolio (400K).
Of course, as with saving and compounding, as a frame of reference – I only earned 75K in all of 2016, yet I earned 65K in 2017 2nd quarter alone in my 401K (a rebalancing also helped). Note: the earning I state here is only the fund earnings, it does not count the savings contribution – but when you add 75K to your accounts in 1 year, the earnings are also compounded on those contributions. That’s why compounding is so amazing! 🙂
Great Interview. Great to see a career woman millionaire.
I too work for a global megacorp.
I keep reading these on here and know i can get there and do as quickly or faster. I have super low expenses (company vehicle, low rent & tiny apartment and relatively cheap hobbies since the Rockies are next door, I find travel annoying since i do it some much for work.)
I have grown my base income by 12.3% annually since i started full time work, increased my value and skills with an MBA & other training and started saving and investing way younger than most which seems to be the number 1 regret. I have 150k invested in Global index funds @ 26 and am adding 40+% of my income to that every year.
My colleagues all have luxury cars, luxury condos and expensive vacations but that hold no appeal for me. I want financial freedom & no money worries!
Maybe one additional comment – I like the ESI philosophy, and enjoy reading these interviews and seeing the diverse methods people apply to achieve their goals. While I think these posts offer some good ideas and insights, I think everyone needs to find their own path to millions.
EARN: Some people make six-figure incomes, some don’t – we did not, now we do. But we were moving in the same direction, working the same plan, in both situations.
SAVE: Some people are hyper-savers and are willing to sacrifice some things now for benefits later, we are not – we save 20%+ of our salary, but we enjoy spending on a 1965 roadster, or a trip to Tuscany, or hosting a huge Christmas party. This is what makes us happy – the balance of saving and spending – “work hard, play hard”.
INVEST: Some people would never consider dealing with the risks and BS of investment real estate, we would – we have the skills to turn over properties for a lower cost than others, and we are willing to put up with occasional BS to have a significant monthly income before we need to access our investment accounts.
Not everyone would agree with our approach, and that’s OK. As long as we all get there, who cares how? 🙂
It’s nice to see inspiring stories featured here. Their pieces of advice are just what I would also tell my clients.
Great interview . . . nice glimpse. I’ve found the added commentary and expansion upon certain topics even more helpful. Nice to see a missing ingredient left out of so many, as in the joy of actual living, or pursuit of the good life beyond the job, though it rarely goes beyond the economics. MMM has some provocative commentary on that front, befitting my far more modest income level, 36k, not growing, wages without bonuses. I hesitate to go negative once again, but I do think it’s significant and important to remember that these are compelling, awesome, often inspiring stories of those who clearly made it, usually the hard way, and remain on their way. But it has a tendency to distort and obscure some of the harder passages, the reality and hazards met by the overwhelming majority of modern Americans. Not that you have to care, at all; hardly an altruist here. Nevertheless, within your own family, the highest of the highlights should be clear enough i.e. that exceptional father, the one brother, talented aunt, and so on. Maybe in a prior generation, your own hardworking self, or possibly one of your offspring, assuming you’re honest. The rest, not so much, not so readily discussed, and there are issues, cumulative issues, violently bad turns, the dismal tide. Their stories can also be very helpful via reverse engineering, but of course, get kind of lost in the forest amid all these glittering firs. For instance, my good to excellent grades, leading to a B.A. at university? Just a minor act of revenge . . . I barely even cared about my major. Never used it really, not yet. Neither did my brothers. The oldest brother went to WSU, the middle one preceded me at UW. Both thought they were hot sh*t for that, so I had to come up and smoke them. Siblings, and a bad pun there, because they both sold drugs, mostly pot, to more or less put themselves through college, at least the majority of the way, one more than another. Used to get grams for my birthday and so on . . . thought it was great and hilarious at the time. I became a bit more wholesome, worked at an antique shop to get me through school, commuter student, now blessed with student loans for life, attached to an almost worthless degree, unused at 51. The middle brother is dead (alcohol), the older one slowly crumbling away (alcohol). And here I stand, the black sheep, the upstart, like a phoenix or something now, probably the greatest potential of them all. It doesn’t feel like a victory though. More like tears and a touch of despair, shadows over my shoulder, counteracting the new positives. All poor shadows of our excellent father, no doubt about that. His story belongs here. My story, their stories, not so much. Just sayin’ . . . keeping it real, since 1968; for that I sincerely apologize, though I will not stop. It’s simply not in my blood.
Father was a millionaire till the Great Recession came around. It knocked him down to 800k. Only one in the family, so far as I know. He passed away before it got really bad. The inheritance money kept me alive through the worst of it, like front row tickets, with no threat of starvation, but also no job for five flipping years, most of it scary as hell. Meanwhile, hardworking grinders despaired and fell around me, through no fault of their own. I think Greenspan and others should be in prison, but you know how that goes. By the time I finally secured employment, I believe there was 400.00 left in checking, nothing else but pocket change and accumulated goods. That’s why I like it when these stories reference ‘the troubles’ . . . a blip to some, but certainly no ghost to the working class or working faithful at the time. I’ve been gun shy ever since.
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Roads to somewhere, roads to nowhere . . . in a kinder light, the patriarch had an M.S. in Electrical Engineering; electrical engineer for life. Matriarch went to nursing school; RN for life. Eldest brother has a B.A. in Business, Marketing; regional sales, produce. Middle brother had a B.A in Psychology, Industrial; wedding DJ, controversial entrepreneur. Youngest brother has a B.A. in History, Classical Studies; table games dealer. Talk about the sunny side (lol). I actually had a good time in college, hanging out with trust fund babes at the Parnassus. Now that’s living . . . that between art history slideshows, or Roman history lectures. Denny Hall, what a beauty . . . nothing but heartache. One thing about that liberal B.A., though: it’s still from the UW, and my grades were good. I don’t want to teach, ever, but I can tack on a cert in financial planning, maybe put a shingle out and advise, counsel, discuss, fee only. Or Schwab it. Primary aspect of my five-year plan, a late-stage bid or shift I can really get behind. I could be the one severely biting my tongue, eyes totally bulging if tithing comes up, possibly coming over the table if you have a gambling problem. Don’t even, but I’ll work on that. Looking the part is easy, also easily half the battle. Caring enough is the thing; on that front, I profoundly care, more than ever.